New Delhi: The Supreme Court has ruled that an auctioning authority cannot arbitrarily cancel the highest valid bid merely because it hopes to secure a higher price in a future auction. Such action, the Court held, undermines the sanctity and credibility of the auction process and violates the principle of fair and non-arbitrary treatment guaranteed under Article 14 of the Constitution.
A Bench of Justice B.V. Nagarathna and Justice R. Mahadevan delivered the judgment on January 6, 2026, allowing appeals filed by Golden Food Products India and setting aside two orders of the Allahabad High Court that had upheld the cancellation of the company’s bid for an industrial plot in Ghaziabad.
The case arose from an auction conducted by the Ghaziabad Development Authority (GDA) for an industrial plot measuring 3,150 square metres under the Madhuban Bapudham Yojana. The reserve price was fixed at ₹25,600 per square metre. Golden Food Products India submitted a bid of ₹29,500 per square metre, around 15.23 percent above the reserve price, and emerged as the highest bidder among just two participants. Its technical bid had already been approved, and an earnest money deposit of ₹80.64 lakh was duly made.
Despite this, the GDA cancelled the bid without prior notice. The authority justified its decision by comparing the appellant’s rate with much higher prices fetched by smaller plots, ranging between 123 and 132 square metres, sold on the same date. Those smaller plots had attracted bids as high as ₹1.21 lakh per square metre. The GDA refunded the earnest money and announced a fresh auction.
The Supreme Court found this approach legally unsustainable. It observed that large industrial plots and small plots operate in different market conditions and cannot be compared mechanically. Demand for smaller plots is naturally higher, while large parcels attract fewer bidders and are priced differently. The Court noted that the GDA itself had fixed an identical reserve price for both large and small plots, implicitly recognising the lower demand for larger areas.
The Bench held that comparing bids for dissimilar properties amounted to introducing new conditions after the auction had concluded. It rejected the argument that the authority could cancel the auction in the name of public interest or revenue maximisation, reiterating that “mere expectation that a still higher price may be obtained” is not a valid ground to scrap a lawful auction.
The Court also pointed out that the GDA had allotted adjacent plots and other plots exceeding 2,000 square metres at prices only marginally above the reserve price, making its treatment of the appellant selective and inconsistent. Cancellation without issuing a notice or granting a hearing was found to be contrary to principles of natural justice.
Clarifying the legal position, the Court held that while a bidder may not have an indefeasible right to allotment, being declared the highest bidder in a valid auction does crystallise corresponding rights and obligations. In the absence of fraud, collusion, or material irregularity, the authority is duty-bound to proceed with allotment.
Setting aside the High Court’s orders, the Supreme Court directed Golden Food Products India to re-deposit the earnest money within four weeks. The GDA was then ordered to issue the allotment letter within two weeks and complete all consequential steps to conclude the auction in favour of the appellant.
The judgment reinforces that public interest cannot be invoked as a pretext for arbitrary cancellation and that dissatisfaction with the financial outcome of an auction does not justify restarting the process.
Case Title:
Golden Food Products India v. State of Uttar Pradesh and Others
(Civil Appeal arising out of SLP (C) Nos. 18095–18096 of 2024)